S&P cuts Di Giorgio

Standard & Poor's said it lowered its ratings for Di Giorgio Corp. and removed them from CreditWatch, where they were placed with negative implications on Nov. 9. The corporate credit rating was lowered to B from B+.

The outlook is stable.

S&P said the downgrade reflects Di Giorgio's weaker credit measures due to slower-than-anticipated progress in attracting new customers to replace the loss of its client, The Great Atlantic & Pacific Tea Co. Inc., late last year. At the end of its third quarter ended Sept. 25, 2004, Di Giorgio had $164 million of debt ($222 million when adjusted for leases) on its balance sheet. Its credit measures had weakened considerably since 2003; lease-adjusted debt to EBITDA was 5.4x, or a full turn higher, and trailing-12-month EBITDA to interest expense was 2.0x.

Di Giorgio has a $90 million secured bank facility due in 2007. Availability under the bank facility is tied to inventory and receivable levels. Liquidity is adequate, with $11 million of cash and around $73 million of availability under the company's revolver as of Sept. 25.

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